Korea Development Bank Signs Overseas Derivatives Contracts with UK Companies and Others

Execution of Interest Rate Swap Transactions for Interest Rate Risk Hedging with UK Local Companies

On the 26th, the Korea Development Bank announced that it has executed an interest rate swap derivative transaction for interest rate risk hedging with a local UK company, becoming the first domestic financial institution to do so. An interest rate swap is a contract in which a borrower with a floating (fixed) interest rate and a borrower with a fixed (floating) interest rate exchange their respective borrowing conditions.

In October, the Korea Development Bank entered into this transaction with Heathrow Airport, the largest airport in the UK, and in November with ABP (Associated British Ports) Group, the largest port operator in the UK. This was accomplished through the London branch derivatives desk. By joining the hedge transaction banking group of these companies, the bank secured new revenue sources and established long-term business relationships.

Yang Seung-won, Vice President of the Korea Development Bank (Global Division), stated, "It is meaningful that we have established business relationships with leading local companies in the London financial market, a battleground for global banks, and presented a new business model to the domestic financial sector."

The Korea Development Bank has completed the development of inflation swap products, which are advancing mainly in developed financial markets including the UK, and is promoting transactions with leading local companies.

Utility companies (water, electricity, gas, etc.) whose sales are linked to inflation trade inflation swaps to manage inflation risk. The UK accounts for 30% of the global inflation swap market.

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